Quantas Industries sold $325,000 of consumer electronics during August under a twelve month warranty. The cost to repair defects under the warranty is estimated at 5% of the sales price. What journal entry should be made for estimated warranty expense on August 31?
Select one:
a. debit product warranty expense $1,354; credit product warranty payable $1,354
b. debit product warranty expense $16,250; credit product warranty payable $16,250
c. debit product warranty payable $16,250; credit supplies $16,250
d. debit product warranty payable $16,250; credit product warranty expense $16,250